The Murdochs Assess the O’Reilly Damage

Bill O’Reilly left Fox News this week for a long-planned vacation to Italy and the Vatican, with his fate in the hands of a Murdoch family calculating the risks and rewards of keeping him on or forcing him out of the network.

Facing a boycott by advertisers, unrest inside the company, protests outside Fox News headquarters and public calls for human rights investigations into company culture, Rupert Murdoch and his sons, Lachlan and James, are reckoning with the fallout of a sexual harassment scandal that has once again engulfed Fox News and its parent company, 21st Century Fox.

The Murdochs are awaiting the results of an investigation into Mr. O’Reilly’s conduct before making a decision about whether he will stay or go, two people briefed on the plan said Wednesday. The law firm Paul, Weiss, Rifkind, Wharton & Garrison has been enlisted by 21st Century Fox to investigate, and although the probe started with a review of accusations made by Wendy Walsh, a former guest on Mr. O’Reilly’s show, the law firm is expected to expand its purview if other issues arise, the people said.

The calculation on whether to keep Mr. O’Reilly is complex and rests in part on a generational divide between Rupert Murdoch, 86, who controls 21st Century Fox, and Lachlan, 45, and James, 44, who have top leadership positions at the company.

Rupert Murdoch, a cleareyed businessman whose priorities often are driven by the bottom line, has long backed Mr. O’Reilly as the Fox News host’s career has soared and pulled the network up along with him. The sons, while also business-minded, have worked to modernize the company’s workplace, which has been the target of repeated allegations of sexual harassment.

Ousting Mr. O’Reilly — in the wake of an investigation by TheNew York Times that found multiple settlements related to sexual harassment allegations against him — could alienate his fans, create programming challenges at the network and result in a significant financial blow for the company. Mr. O’Reilly has long reigned as the king of cable news, with his show, “The O’Reilly Factor,” not only pulling in top ratings but also anchoring the prime-time lineup at Fox News.

Yet keeping Mr. O’Reilly, while viewed by some as in the best interest of shareholders, could result in reputational damage. Critics both inside and outside the company have said that standing by Mr. O’Reilly would contradict the brothers’ stated commitment to maintaining “a work environment based on trust and respect.”

The Murdochs are in a position similar to the one they were in last July, when determining whether to force out Roger Ailes, the network’s founding chairman. After two weeks, the company ultimately decided to oust Mr. Ailes after lawyers from Paul Weiss took statements from at least six women who described inappropriate behavior by him.

At the time, Rupert Murdoch thanked Mr. Ailes for his “remarkable contribution” to the company; he left with an exit package worth $40 million.

The back and forth over Mr. O’Reilly’s future at the network, where he earns an estimated $18 million a year, comes after the company extended his contract, which had been set to expire this year, according to people familiar with the matter. At the time, the company knew of several settlements that had been reached with women who had complained about his behavior.

In response to the Times investigation, 21st Century Fox has said that it discussed the issue with Mr. O’Reilly. The company believes his new contract gives it more leverage over him regarding his behavior, according to two people familiar with the matter.

Both Mr. O’Reilly and Mr. Ailes have denied the allegations against them. Mark Fabiani, a spokesman for Mr. O’Reilly, has said that Paul Weiss had already been retained by the company “to look into all hotline calls” and that there was “nothing special” about the handling of this case.

Mr. Fabiani said that Mr. O’Reilly’s vacation coincided with his children’s spring break and that arrangements, including airline and hotel, had been made in October. “Other than the vacation guest hosts, the ‘Factor’ broadcast will remain unchanged until Mr. O’Reilly’s return post-vacation,” Mr. Fabiani said.

Mr. O’Reilly is expected to return to his show on April 24. Dana Perino, another Fox News host, is filling in for him, for at least some of the broadcasts.

Though Rupert Murdoch acceded to Mr. Ailes’s departure, he has shown a resistance to wholesale change at Fox News. When Mr. Ailes left, he installed himself as its chairman and quickly promoted two longtime network executives, Jack Abernethy and Bill Shine, to co-president.

Inside Fox News, Mr. Shine is reputed to be a vigorous advocate for keeping Mr. O’Reilly on, according to three people told of internal discussions. A longtime Fox News executive and Ailes loyalist, Mr. Shine is viewed as a holdover from the Ailes era, but he is also close to some of the network’s major stars, including Sean Hannity. Mr. Shine is also seen in the newsroom as channeling the views of typical Fox News viewers, millions of whom remain loyal to Mr. O’Reilly.

As the Murdochs grapple with the decision about Mr. O’Reilly at the very top of the company, a sense of unease gripped Fox News employees, especially women working in both on- and off-the-air roles, according to current newsroom employees. And at the entertainment side of 21st Century Fox, morale is starting to suffer, particularly among middle- and lower-rank female employees.

In interviews, workers at the Fox broadcast network; the FX and National Geographic cable channels; and the 20th Century Fox movie studio used words like “outrage,” “embarrassment” and “depressing” to describe how they feel about the Murdochs’ standing by Mr. O’Reilly.

These people — men and women, ranging from senior executives to relatively low-level administrators — communicated by phone or text message on the condition of anonymity to discuss internal matters. Several said they were afraid of reprisals if they were caught expressing their frustration.

None said they had spoken to a manager or to human resources personnel about their position.

Two 21st Century Fox executives who do not work in the news division said Wednesday they were eager for a resolution so the company could move on from the distraction and adopt a more productive work environment. They said they were troubled by the allegations but relieved that the turmoil was not directly affecting their divisions.

Externally, pressure continues to build. More than a week after advertisers started to boycott Mr. O’Reilly’s show, there have been calls for government agencies to investigate sexual harassment and retaliation issues at Fox News.

The latest such call came on Wednesday, when Letitia James, the New York City public advocate, said she had asked that the city’s Commission on Human Rights investigate.

Ms. James organized a protest outside Fox News headquarters in New York on Wednesday evening, where around 50 protesters gathered. Speakers highlighted the sexual assault settlements that Mr. O’Reilly has paid out and pointed to his recent public criticism of the hairstyle of Representative Maxine Waters, a California Democrat and an African-American, as examples of the issues they were trying to highlight.

Holding a sign that read “make this vacation permanent,” Leeanne M. G-Bowley said she had long disagreed with the politics of Fox News and was especially upset to see how poorly women and minorities were treated by the network, both on and off the air. “I hope the company will change its policy to address what seems like a systemic problem,” she said.

Brooks Barnes contributed reporting from Los Angeles, and Michael M. Grynbaum, John Koblin and Zach Wichter from New York.

A version of this article appears in print on , on Page B1 of the New York edition with the headline: Murdochs Assessing O’Reilly Damage. Order Reprints | Today’s Paper | Subscribe